The assessments or community fees collected by homeowners associations (HOAs) can play an important role in community maintenance. Those fees help cover the cost of maintaining shared amenities such as a pool or community garden spaces.
HOAs assess fees based on the values of individual properties within the community and the services the HOA provides. Most homeowners are diligent about covering their assessments every month. In some cases, mortgage lenders may roll those costs into the monthly payment a homeowner makes along with the funds required for their escrow account.
Other times, property owners may need to pay those assessments directly. In such scenarios, there is reason to worry about homeowners becoming delinquent by falling behind on assessment payments. Many HOAs initially send invoices and warning letters but may then need to take more assertive action. Pursuing a lien against a property can be an effective way to push a homeowner into compliance.
Liens can lead to foreclosure
A lien is a record of a financial obligation granted by the courts. The party owed money provides information about the lien to the local County Recorder’s office. The record of the lien prevents the property owner from selling the home, transferring their interest in it or refinancing without first resolving their unpaid assessments.
Sometimes, simply seeking a lien results in a homeowner paying their past-due assessments. In some cases, property owners may continue to avoid paying what they owe. In such cases, the HOA may be able to foreclose on the lien.
The foreclosure process can potentially force the homeowner to sell the property or to refinance their existing loan to withdraw equity that they can use to cover their unpaid assessments and any late fees or penalties added to the base amount due. Homeowners do have rights when facing foreclosure, including the right to redeem the property and to have representation when addressing the issue in court. Their response to a lien or foreclosure attempts can result in a much longer process.
While those who help operate HOAs want to serve their community rather than cause hardship for their neighbors, enforcing fees is an important element of the job. In scenarios where property owners do not contribute their fair share toward the maintenance of the community, taking legal action by requesting a lien and then enforcing it if they still refuse to pay can be the best option available.
Consistent HOA rule enforcement is often necessary to maintain the legal authority of an HOA and to help preserve the character of a community. Seeking a lien when a property owner refuses to pay what they owe give may be a complex but necessary step accordingly.